EQUITIES
Shares in Asia-Pacific largely slipped on Friday. Mainland Chinese stocks fell, with the Shanghai composite down 0.70% while the Hong Kong’s Hang Seng index shed 0.46%. South Korea’s broader KOSPI slipped 0.28%, while the Australia’s S&P/ASX 200 was little changed.
Elsewhere, the S&P BSE Sensex in India rose 0.23%, while the Singapore’s FTSE Straits Times Index and Japan’s Nikkei 225 advanced 0.05% each.
Overnight on Wall Street, the Dow Jones Industrial Average rose 0.78%, to 35,064.25, the S&P 500 gained 0.60%, to 4,429.12 and the Nasdaq Composite added 0.78%, to 14,895.12.
OIL
Oil slipped on Friday and headed for the biggest weekly loss this year as the spread of the Delta COVID-19 variant cast doubt on the continued recovery in demand. A surprise jump in U.S. stockpiles has also hurt prices, although worries over rising tensions between Israel and Iran limited the decline.
The Brent last traded at $71.92 per barrel, and U.S. crude futures traded at $68.18 per barrel. Both on track to more than 6% weekly loss.
Overnight, the Brent settled at $71.29 a barrel, while the WTI ends at $69.09 per barrel.
CURRENCIES
Treasury yields extended their gains on Friday, having earlier been helped by the healthy jobless claims report. Benchmark 10-year Treasury notes yields rose to 1.227% compared with its close of 1.217% on Thursday.
The U.S. dollar index inched up to 92.351 and is 0.26% higher so far this week.
In cryptocurrencies, Bitcoin was back above $40,000 and Ether maintained a rally, following the software upgrade overnight that will trim the pace at which tokens are minted.
GOLD
The stronger dollar and potential for higher yields hurt gold. Spot gold fell 0.22% to $1,800.10 per ounce. U.S. gold futures eased 0.38% to $1,802.10.
Silver slipped 0.7% to $25.11 per ounce and palladium was flat at $2,649.00. Platinum hit an over 7-month low and was last down 1.18% at $993.80.
ECONOMIC OUTLOOK
Asian shares failed to catch a firm lead from a higher Wall Street session on Friday as the spread of the Delta variant of the coronavirus across the region heightened worries about its economic recovery. Volatility surrounding the Chinese regulatory drive also squeezed stocks.
In China, investors continue to scrutinize Beijing’s regulatory crackdown. Liquor and e-cigarette stocks dipped amid concerns they are next in line for stricter curbs, after property, technology, and education sectors.
The Nasdaq and S&P 500 closed at record levels overnight after a wave of strong corporate earnings and a further decline in U.S. unemployment claims eased growth concerns stirred by the Delta coronavirus strain.
U.S. Labor Department reported the number of Americans filing new claims for unemployment benefits fell by 14,000 to 385,000 in the week ended July 31, while layoffs dropped in July to their lowest level in just more than 21 years. Continuing claims for state benefits fell to 2.93 million in the week ended July 24, a fresh pandemic low.
A second weekly drop in U.S. jobless claims stoked optimism for a strong payrolls report Friday, which could spark market swings. Analysts say a disappointing number might raise questions about an economic recovery, but it could also lead the Federal Reserve to remain accommodative. An amount is more than a million could send the dollar and U.S. yields sharply higher, while a number under 650,000 could rattle nerves, though perhaps not the dollar if it benefits from investors' risk-aversion.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.054 and 110.474.
- Support line of 109.214 and 108.794.
Commentary/ Reason:
The dollar sat at a 1-week high of 109.869 Japanese yen on Friday, after bouncing solidly from a low of 108.722 that it touched on Wednesday.
The dollar was supported by the healthy jobless claims report, and now lead up to the release of U.S. employment data, as markets braced for the numbers that could make the case for faster U.S. policy tightening at a time when action in Japan remains distant.
The yield on the 10-year US Treasury note is currently at highest for the week, also lending support for the greenback.
The USD/JPY has started a decent recovery from the support level as bullish sentiment has begun to rise in recent trading. The pair needs to extend gains beyond 109.00, the immediate resistance level, to extend its advance. Previous rally attempts have been contained by the descending trendline, as sellers generally return at this resistance zone.
